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Reserve Bank warns of possible rate hike later in 2021 as it keeps repo rate unchanged at 3.5%

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South African Reserve Bank (SARB) Governor Lesetja Kganyago has announced that the repo rate will remain unchanged at 3.5%, meaning that there is no increase in rates at this stage.

However, Kganyago has warned of a possible 25 basis point rate hike towards the end of 2021 and similar hikes next year. The bank had cut rates by 300 basis points in 2020 to counter the massive impact of the lockdowns on the country.

Kganyago says the inflation outlook remains benign. He says the Consumer Price Index (CPI) is expected to measure around 4.3% this year, which is well within the bank’s target of between three and 6%.

Kganyago was addressing the media on Thursday afternoon after the Monetary Policy Committee’s meeting this week.

Reserve Bank’s Monetary Policy Committee announces interest rate decision: 

 

Economists had expected the central bank to keep the repo rate unchanged.

Below is the reaction to the Reserve Bank’s decision:

 

 

 

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